Money can't buy you community regeneration, so what next?

Thinktank Localis concludes that local leadership and community action are the best ways to spark regeneration

The Coin Street Community Builders project successfully regenerated a section of London's South Bank into a thriving, mixed use development. Photograph: Linda Nylind for the Guardian Linda Nylind/Guardian

Despite decades of investment by governments of all colours, British policy makers had realised by the 1990s that attempts to regenerate through development alone would not solve the problem of social deprivation.

Though these wider social issues and the role of the private and voluntary sectors in sparking regeneration were acknowledged, the relative buoyancy of the country's finances well into the 2000s meant that investment still flowed.

As we're used to hearing by now, times have changed and belts must tighten. Making the most of social capital is no longer a bonus, it's a necessity.

Whitehall has finally accepted the message. Issues historically addressed by allocating a central budget are now being considered in new ways, and giving rise to different questions. Is there community solution? Maybe direct public sector intervention isn't the best answer? Perhaps someone else could do it better? There's a long way to go, but it's a start.

Communities have demonstrated themselves capable of running their own small-scale regeneration projects. Social enterprises such as the Coin Street Community Builders, originally formed in protest to a "one size fits all" regeneration plan, have transformed part of London's South Bank into a thriving mixed-use development.

Elsewhere, community feeling might not be so visible, or even existing, but it's down to local leaders to identify and nurture it where they can. At the very least, they can ensure that solutions that run contrary to local priorities aren't imposed.

We believe that local government leaders have a vital role to play in leading local regeneration efforts, as champions of the local community, directly accountable to the electorate and operating from a position far closer to residents than central government and its agencies. But local leadership comes in many forms, from parish councils to volunteers and business leaders, and none should be held back.

Throughout our research we found a multitude of interesting and diverse approaches. Respecting and facilitating a variety of policy solutions to meet local needs is a core part of the localist ideal. It is a principle that all levels of government, from parish councils up to government departments, must never stop reminding themselves of.

Given the challenges facing the country over the coming years, regeneration efforts are more vital now than ever before.

It's a challenging policy area to tackle, but would-be regenerators need to think holistically, and that means involving and making the most of their communities – because it turns out that money can't buy you regeneration.

Steven Howell is a senior policy officer at the thinktank Localis and author of Grow your own way, a report looking at local approaches to regeneration